James isn't good at math, but he does know a few things about counting inventory.
Hi, I’m James, this is Whiteboard Wednesday. Today we’re going to talk about how to count inventory, specifically, performing a physical inventory count. You got your goods, your products, you’re going to count it—hopefully not with an abacus—and then you’ll have your final tally.
So, WHAT are we counting?
Our raw goods. The materials that we’re using to create or distribute products. Obviously our finished products that we may still have in-house. But also our assets, this one gets overlooked a lot. Maybe you have a fleet, maybe you have an autoclave that you need to count. Whatever you have cash tied up in, that you can count as an asset.
WHERE are we going to perform this?
Well obviously your place, but what about their place? Consider if you have a third party holding on to goods for you, or if you even have another location, in another part of town, another part of the lot. But also, the in-between. Do you have items coming in transit? You need to make sure you’re thinking of those, because the second they come in and you’ve already done your count, you might be goofing up on your numbers.
The WHY. Pretty straight forward but people still miss out on it.
Your stock levels. Once you know your final numbers, you can keep track of things like shrinkage, seasonality, demand. You need to know what you have so you can know what to do with it.
But obviously you need to know your accounting. What’s just sitting there? How much money is tied up in your shelves. What’s selling? How much is all of this worth? Important to know.
So let’s do just a couple tips for you physical inventory count.
Test a little area that you plan on counting and then time that so you know overall about how long it should take.
You can tag the stuff that you have so you don’t go over the same area again, that’s going to waste a lot of time.
Make sure that you do that final tally. A lot of companies will do this whole process, and then forget to put the numbers in right away.
And finally, if you’re doing all this work, whether it’s end of the month, once a quarter, hopefully a couple time a year—it takes a lot of time—consider automating so that once you’ve done this, you put all this information in into an automated inventory solution, and now you can really keep track of things much more efficiently.
That’s this Whiteboard Wednesday, I’m James, see you again next time.